Sanctions update for Iran

The Department of State and the Department of the Treasury will take the necessary steps to establish a 90-day and a 180-day wind-down period for activities involving Iran that were consistent with the U.S. sanctions relief provided for under the JCPOA.  The Office of Foreign Assets Control (OFAC) expects that all the U.S. nuclear-related sanctions that had been lifted under the JCPOA will be re-imposed with effect from 5 November 2018.  However, some sanctions will be re-imposed after a 90-day wind-down period ending on 6 August 2018.

British Marine and QBE Asia P&I are able to provide coverage, process premiums and pay claims, provided that it is legally permissible to do so and there is no apparent exposure for British Marine and QBE Asia P&I to the US “primary” sanctions and the newly re-imposed sanctions when providing cover or paying claims. We will be undertaking the full due diligence of Iranian parties on a case by case basis, in order to assess the risk/claim for potential exposure to sanctions. New and existing policies will be reviewed with caution.  In addition to adequate due diligence we would expect there to be an adequate sanctions exclusions clause on risk and will work with assureds to enable this.

We reiterate that claims will be paid, subject to the terms and conditions of the policy, where it is legally permissible to do so.  Any relevant licences will be requested from the relevant authority to enable us to make payment(s) legitimately, and this process can take time.  Iran remains a high risk territory, and it is important from a regulatory perspective that the appropriate due diligence is undertaken.

Please speak to your usual underwriting contact if you require further information on prohibitions relevant to (re)insurance.

EU Sanctions still in force

A complete embargo remains on the export to Iran of military goods and technology; missile technology; equipment for internal repression; and equipment for monitoring communications (and the provision of all related financial assistance). Prior authorisations from the Export Control Organisation, part of the Department for Business, Innovation and Skills ("BIS") remain a requirement for the export to or for use in Iran of:

• Goods and technology on the Nuclear Suppliers Group list (and "associated activities" connected with such goods and technology);
• Other listed dual-use goods and technology that could contribute to reprocessing, enrichment-related, heavy water-related or other activities inconsistent with The Joint Comprehensive Plan of Action  (“JCPOA”);
• Graphite and raw or semi-finished metals; and
• Enterprise Resource Planning software, designed specifically for use in nuclear and military industries.

The UK Government has stated that it continues to fully support expanding the UK’s trade relationship with Iran.

US Sanctions

British Marine and QBE Asia P&I are not US persons (as defined in OFAC Reg. 31 C.F.R. 560.314). However we need to remain mindful of the potential risk associated with the following;

• The possible involvement of US persons (such as employees, other parties or banks) in any way in the Iran-related transactions in which they may become involved – for example, US primary sanctions against Iran will continue to apply to US nationals.
• US persons wherever located, are prohibited from engaging in any transaction or dealing in or related to: Goods or services of Iranian origin or owned or controlled by the Government of Iran.
• The denomination of payments under the relevant risk in US Dollars – payments should not be made or denominated in USD where they relate to activities which are or would be prohibited under US primary sanctions against Iran.
• S. origin goods, software or technology or goods, software or technology made up of more than de minimis US origin content.
• Outwards reinsurance including US reinsurers.

Details of the re-imposition of US sanctions

Sanctions re-imposed after 90-day wind-down period ending 6 August 2018

• Sanctions on the purchase or acquisition of U.S. dollar banknotes by the Government of Iran;
• Sanctions on Iran’s trade in gold or precious metals;
• Sanctions on the direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminum (aluminium) and steel, coal, and software for integrating industrial processes;
• Sanctions on significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial;
• Sanctions on the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt;
• Sanctions on Iran’s automotive sector.

In addition, the following JCPOA-related authorisations will be revoked after the 90-day wind-down:

• The importation into the United States of Iranian-origin carpets and foodstuffs and certain related financial transactions pursuant to general licenses under the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR);
• Activities undertaken pursuant to specific licenses issued in connection with the Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services (JCPOA SLP); and
• Activities undertaken pursuant to General License I relating to contingent contracts for activities eligible for authorisation under the JCPOA SLP.

Sanctions re-imposed after the 180-day wind-down, effective from the 5 November 2018

• Sanctions on Iran’s port operators, and shipping and shipbuilding sectors, including on the Islamic Republic of Iran Shipping Lines (IRISL), South Shipping Line Iran, or their affiliates;
• Sanctions on petroleum-related transactions with, among others, the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), and National Iranian Tanker Company (NITC), including the purchase of petroleum, petroleum products, or petrochemical products from Iran;
• Sanctions on transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions under Section 1245 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA);
• Sanctions on the provision of specialised financial messaging services to the Central Bank of Iran and Iranian financial institutions described in Section 104(c)(2)(E)(ii) of the Comprehensive Iran Sanctions and Divestment Act of 2010 (CISADA);
• Sanctions on the provision of underwriting services, insurance, or reinsurance; and
• Sanctions on Iran’s energy sector.

European Commission acts to protect the interests of EU companies: Blocking legislation

On Friday 18 May the EU announced it is taking steps to preserve the interests of European companies investing in Iran in response to mitigating the impact of US sanctions on European businesses. The EU will be amending its Blocking Regulation to preserve the interests of European companies investing in Iran.  The European Parliament and Council now have less than two months to raise any objections to the measures in the amended Blocking Regulation before it enters into force in August 2018.

We are continually monitoring the situation in relation to the changes in sanctions for Iran and any impact that this will have on British Marine and QBE Asia P&I, and we will notify our assureds of any relevant changes.  We will continue to work with our assureds to provide positive insurance solutions in line with legal parameters.  However please note that the area of sanctions is fast moving and is subject to change, and the stance of British Marine and QBE Asia P&I may need to adapt to such change depending on the circumstances.

If you have any questions relating to the above please refer to your usual contact at British Marine or QBE Asia P&I.